NIGHTINGALE REPORTS FISCAL 2011 FIRST QUARTER RESULTS

MARKHAM, ON, Aug. 26 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), an application service provider (ASP) of electronic medical record (EMR) software and related services announces its financial results for the first quarter ended June 30, 2010. All results are reported in Canadian dollars unless otherwise stated.

Q1 Fiscal 2011 Financial Summary
--------------------------------
- Revenue increased to $4.4 million, compared to $4.1 million in Q1
F2010. Revenue growth is attributed to an increase in software
licensing revenues, which offset a $0.4 million decrease in
transcription revenue and a negative foreign exchange impact of $0.3
million.
- Gross profit margin reached a record high in the Company's recent
history at 80%, up from 71% in Q1 F2010, as a result of the Company's
increased focus on generating high-margin software revenue.
- The trend of EBITDA(1) improvement reached a record high as it grew
to $0.6 million from $23,000 in Q1 F2010, primarily as a result of
increased revenues and gross profit.
- Net profit before tax was $8,000, compared to a net loss before tax
of $0.08 million in Q1 F2010.
- Net loss was $9,000 compared to net loss of $0.8 million for Q1
F2010.
- Cash from operations increased to $1.0 million from $(1.0) million in
Q1 F2010, driven by strong high-margin software sales.
- Completed a private placement of common shares and subscription
receipts, as well as revolving and term debt financings for aggregate
gross proceeds of $6.3 million. A total of $2.1 million, or 63%, of
the proceeds from the private placement of common shares and
subscription receipts came from Directors, Officers and other
insiders. Subsequent to quarter end, used the proceeds to complete a
comprehensive debt refinancing, which the Company expects will result
in reduced interest expense, starting in Q2 F2011, and increased
overall financial flexibility.
Q1 Fiscal 2011 Operational Highlights
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- Signed agreements with healthcare providers across Canada,
representing the deployment of more than 200 EMR seats.
- Achieved Approved Vendor status as part of Saskatchewan's EMR
program, which is jointly funded through the Saskatchewan Medical
Association (SMA) and the Saskatchewan Ministry of Health.
- Subsequent to quarter end, signed a five-year EMR and practice
management agreement with the AIM Health Group to support more than
150 healthcare professionals across Canada, who conduct more than 1.5
million patient visits per year.

"Fiscal 2011 is off to an encouraging start, with more than 200 EMR seats sold across Canada in Q1, compared to only eight seats sold in Q1 of last year," said Sam Chebib, President and CEO, Nightingale. "This is further evidence of the strengthening of the EMR market now that government funding has been released. In addition, as a result of our funding approval in Saskatchewan in the quarter, we are positioned to further broaden our Canadian customer penetration. Government funding initiatives are currently a key catalyst for EMR adoption. There may be some near-term fluctuations in adoption as funding is rolled out; however, we do expect to see increasing implementation of EMR over the longer term. With funding now available in many of our target markets across North America, we believe we are poised for growth."

Mr. Chebib added: "Strengthening our financial performance continues to be our primary focus for fiscal 2011. We aim to increase high-margin software sales and grow revenues, particularly by leveraging our Canadian market leadership to further expand our physician customer base. This is demonstrated by our recently announced major five-year contract win with AIM Healthcare Group, one of the largest ambulatory healthcare providers in Canada."

Mr. Chebib continued: "In addition, we remain committed to carefully managing our expenses and cash with the goal of achieving consistent positive cash flow and profitability, while concentrating our investments in areas that enable us to best capitalize on the increase in EMR adoption we are starting to see. I am satisfied with the performance we are reporting this quarter, including our sixth consecutive quarter of positive EBITDA and $1 million of positive cash flow from operating activities, as well as the trends underlying these results. I am also pleased and encouraged by the support of our Directors, Officers and other insiders by way of their participation in our recent placement of debt and equity."

Financial Review
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Revenue for the Q1 fiscal 2011 was $4.4 million, compared to $4.1 million for Q1 fiscal 2010. The year-over-year improvement is primarily the result of a $1.0 million increase in non-recurring software license revenue, which was partially offset by a $0.4 million decrease in revenue from the Company's lower-margin transcription business, as well as a negative $0.3 million foreign exchange impact (the Company generated 53% of Q1 fiscal 2011 revenue in the US), which predominantly affected the Company's recurring revenue.

Recurring Revenue(2) for Q1 fiscal 2011 was $2.8 million, compared to $3.6 million for Q1 fiscal 2010. The year-over-year decline is primarily a result of a reduction in transcription revenue and the negative foreign exchange impact. Transcription revenue decreased to $80,000 from $0.5 million for the same period last year. Nightingale expects to realize further reductions in transcription revenue in fiscal 2011, which the Company believes will be offset by revenue generated from higher margin software sales over the longer term.

Recurring revenue generated by Nightingale's core business (which excludes the Company's transcription revenues and the impact of foreign exchange) was $3.1 million for Q1 fiscal 2011 , up from $3.0 million for the same period last year.

Non-Recurring Revenue(2) for Q1 fiscal 2011 was $1.6 million, up from $0.6 million for Q1 fiscal 2010, primarily due to the $1.0 million increase in license revenue driven by sales of the Company's Nightingale on Demand EMR product.

Expenses for Q1 fiscal 2011 decreased 4% to $3.4 million from $3.5 million in Q1 fiscal 2011. This decline in expenses is primarily the result of a decrease in amortization expense associated with intangible assets, which was partially offset by the Company's increased investment in sales and marketing. The decrease in the value of the Canadian dollar compared to the US dollar also contributed to the decline in expenses. In Q1 2011, approximately 39% of Nightingale's expenses were incurred in the US, providing the Company with a natural hedge position that offsets some of the negative foreign exchange impact on revenue.

EBITDA increased to $0.6 million in Q1 fiscal 2011, from $23,000 in Q1 fiscal 2010.

For Q1 fiscal 2011, net loss improved to $9, 000, up from $0.8 million for the same period last year.

Cash generated from operating activities increased to $1.0 million for Q1 fiscal 2011 from $(1.0) million in Q1 fiscal 2010, reflecting both the improvement in the Company's bottom line results as well as timing of the collection of cash on deferred revenue.

Cash and cash equivalents were $3.6 million at June 30, 2010, compared to $2.5 million at June 30, 2009. At June 30, 2010, total common shares issued and outstanding were 76,310,915.

In April 2010, Nightingale announced that it completed private placement financings (collectively, the "Private Placement") of common shares and subscription receipts, for aggregate gross proceeds of $3.3 million, and entered into a commitment with a third-party financial institution for additional aggregate gross proceeds of approximately $3.0 million in revolving and term debt (collectively, the "Senior Loan Facility"). On July 29, 2010, subsequent to quarter end, the Company used the proceeds of the Private Placement and the Senior Loan Facility for general corporate purposes and to refinance its outstanding $5.3 million in subordinated debt on more favourable terms.

The Company completed the Private Placement on April 20, 2010, whereby it issued an aggregate of 5.7 million common shares of the Company at a price of $0.22 per Common Share for gross proceeds of $1.3 million and concurrently issued 2,074 subscription receipts ("Subscription Receipts") for gross proceeds of $2.1 million, all on a non-brokered private placement basis. The Subscription Receipts were all automatically converted on July 29, 2010 pursuant to their terms. On conversion, each Subscription Receipt entitled the holder to receive, without additional consideration, a convertible unsecured subordinated debenture in the aggregate principal amount of $1,000 (collectively, the "Debentures"). The Debentures bear interest at a rate of 12% per annum, payable monthly and are scheduled to mature in July 2013. Following the first year anniversary of the Debentures, the Company has the right to redeem the Debentures, in whole or in part, at a price equal to their principal amount plus accrued and unpaid interest. The Debentures are convertible at the holder's option into fully-paid Common Shares at any time prior to maturity or redemption at a conversion price of $0.35 per share. Upon the automatic conversion of the Subscription Receipts, an amount of escrowed funds equal to $2.1 million was released to the Company.

This press release should be read in conjunction with Nightingale's Consolidated Financial Statements for the quarter ended June 30, 2010 and the accompanying Management Discussion and Analysis. The financial statements and MD&A will be available at www.nightingalemd.com and filed on www.sedar.com on August 26, 2010.

Nightingale will host a conference call on Thursday, August 26, 2010 at 8:30 a.m. Eastern Standard Time. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8192. Please connect approximately fifteen minutes prior to the call, and reference conference ID 94720206 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, September 2, 2010. To access the archived conference call, dial 1-800-642-1687 and enter reference 94720206 followed by the number sign. To listen to the conference call on-demand at your convenience please send an email to info@nightingale.md and a copy of the call recording will be emailed directly to you.

Non-GAAP Financial Measures

The Company internally measures its performance and results of initiatives through a number of measures that are not recognized under Canadian generally accepted accounting principles (GAAP) and may not be comparable to similar measures used by other companies.

1. EBITDA

EBITDA is a non-GAAP measure that management believes is a useful measurement to evaluate the performance of the Company. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings as determined in accordance with GAAP. The Company's method of calculating EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies.

EBITDA is defined as earnings before other loss (income), interest, income taxes, depreciation, amortization, and stock-based compensation. Management believes it is useful to exclude these items as they are either non-cash expenses, items that cannot be influenced by management in the short term, or items that do not impact core operating performance, and Management uses this information internally for forecasting and budgeting purposes. The following provides a reconciliation of EBITDA to Loss and Comprehensive Loss:

The Company has included recurring revenue and non-recurring revenue measurements since it believes that this information is useful to investors to evaluate its performance. Investors should be cautioned, however, that recurring revenue and non-recurring revenue should not be construed as an alternative to revenue as determined in accordance with GAAP. Recurring Revenue is comprised of utilization fees, hosting, support and maintenance revenue, data management and transcription services, billing and financial management services and transactional fees. Non-Recurring Revenue is comprised of revenues generated from sales of software and systems and related training, data conversion and installation services.

The following provides a reconciliation of Recurring Revenue and Non-Recurring Revenue to Revenue:

Nightingale is one of the fastest growing health care service and software companies in North America and is recognized as an industry leader in Web-based clinician and community based electronic medical records (EMR) serving the needs of small primary care practices, multi-physician outpatient clinics, and large scale regional health organizations and networks. Coupled with integrated practice management, transcription and revenue cycle management, Nightingale's comprehensive service offering allows customers to enhance patient care, increase revenue opportunities and optimize operations. Nightingale is continuously innovating and enhancing its services to meet the needs of its growing and diverse customer base. Nightingale - Healthcare connected. www.nightingalemd.com

Forward Looking Statement

This press release contains "forward-looking statements" respecting the issuance and cancellation of securities of the Company within the meaning of applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward- looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Nightingale to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the speculative nature of the medical software industry, which is affected by numerous factors beyond Nightingale's control; the ability of Nightingale to successfully integrate its acquisitions and any liabilities arising as a result of such acquisitions, access to capital and agreements with its Lenders; the existence of present and possible future government regulation; access to debt or equity financing and agreements with its Lenders; the significant and increasing competition that exists in the medical software industry; the early stage of Nightingale's business; and therefore it is subject to the risks associated with early stage companies, including uncertainty of revenues, markets and profitability and the need to raise additional funding. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Although management believes the assumptions used to make such statements are reasonable at this time, our assumptions may not to be as anticipated, estimated or intended. Certain material factors or assumptions applied by management in making forward-looking statements, include without limitation, factors and assumptions regarding Nightingale's continued ability to fund its business, rates of customer defaults, relationships with, and payments to, lenders, demand for Nightingale's products, as well as Nightingale's operating cost structure.

Although Nightingale has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Nightingale does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. Further information on Nightingale Informatix Corporation is available at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.